Evanston, WY

Wednesday, September 09, 2009

Consumers seeking help from "debt settlement" firms are finding themselves in more trouble with creditors than when they started. Now, state Attorneys General are taking legal action to shut these firms down and to recover millions of dollars in restitution for consumers.

Kelly Shelton, of the non-profit Family Financial Education Foundation says The New York State Attorney General has filed suit against several debt settlement companies for fraud. Recently the Texas State Attorney General has filed suit to recover over $4 million on behalf of 2500 debt-settlement customers who never received the debt relief they were promised. Texas is also seeking civil penalties for violation of the "Texas Deceptive Trade Practices Act" Other states are contemplating similar action.

In addition, warns Mr. Shelton, "Many of these debt settlement companies have an "F" rating with the Better Business Bureau. Why? Because consumers are enticed by their marketing message of…'we can cut your debt in half and lower your payments' only to find that their message was too good to be true. "

Mr. Shelton wants consumers to understand how debt settlement firms operate. Typically, they ask consumers to stop paying creditors and instead send money to the debt settlement company that the company supposedly "holds" on behalf of the consumer to settle their debts at a later date. A substantial portion of those funds are kept by the debt settlement company as fees. Meanwhile, since no money is going to creditors, consumers find that:

• Creditor and collection calls increase and intensify.

• Account balances increase due to late fees and non-payment

• Credit scores decline drastically

• Creditors pursue legal action and garnishments

Consumers also need to understand that even if a debt settlement firm tries to negotiate on your behalf, NO creditor is obligated to deal with them. Creditors are completely within their rights to seek the full amount owed by any legal means.

Mr. Shelton says with credit card defaults at an all time high, debt settlement companies prey on debt strapped individuals seeking a way out – only to disappoint them and leave them worse off than when they started. There is real help available to consumers who cannot pay their bills. Options include credit counseling, debt management, bankruptcy or even trying to deal directly with creditors you owe.

Kelly Shelton is available for interviews.

For more information or to book an interview with Kelly, contact Donna Garbett, 307-789-2010 or email: donnag@ffef.org

Kelly Shelton

Family Financial Education Foundation

Evanston, WY

307-789-2010